TY - JOUR AU - Autor,David H. AU - Katz,Lawrence F. AU - Kearney,Melissa S. TI - Trends in U.S. Wage Inequality: Re-Assessing the Revisionists JF - National Bureau of Economic Research Working Paper Series VL - No. 11627 PY - 2005 Y2 - September 2005 UR - http://www.nber.org/papers/w11627 L1 - http://www.nber.org/papers/w11627.pdf N1 - Author contact info: David Autor Department of Economics MIT, E52-371 50 Memorial Drive Cambridge, MA 02142-1347 Tel: 617/258-7698 Fax: 617/253-1330 E-Mail: dautor@mit.edu Lawrence F. Katz Department of Economics Harvard University Cambridge, MA 02138 Tel: 617/495-5148 Fax: 617/613-1245 E-Mail: lkatz@harvard.edu Melissa Schettini Kearney Department of Economics University of Maryland 3105 Tydings Hall College Park, MD 20742 Tel: 301/405-6202 E-Mail: kearney@econ.umd.edu AB - A recent "revisionist " literature characterizes the pronounced rise in U.S. wage inequality since 1980 as an "episodic " event of the first-half of the 1980s driven by non-market factors (particularly a falling real minimum wage) and concludes that continued increases in wage inequality since the late 1980s substantially reflect the mechanical confounding effects of changes in labor force composition. Analyzing data from the Current Population Survey for 1963 to 2005, we find limited support for these claims. The slowing of the growth of overall wage inequality in the 1990s hides a divergence in the paths of upper-tail (90/50) inequality -- which has increased steadily since 1980, even adjusting for changes in labor force composition -- and lower tail (50/10) inequality, which rose sharply in the first-half of the 1980s and plateaued or contracted thereafter. Fluctuations in the real minimum wage are not a plausible explanation for these trends since the bulk of inequality growth occurs above the median of the wage distribution. Models emphasizing rapid secular growth in the relative demand for skills -- attributable to skill-biased technical change -- and a sharp deceleration in the relative supply of college workers in the 1980s do an excellent job of capturing the evolution of the college/high-school wage premium over four decades. But these models also imply a puzzling deceleration in relative demand growth for college workers in the early 1990s, also visible in a recent "polarization" of skill demands in which employment has expanded in high-wage and low-wage work at the expense of middle-wage jobs. These patterns are potentially reconciled by a modified version of the skill-biased technical change hypothesis that emphasizes the role of information technology in complementing abstract (high-education) tasks and substituting for routine (middle-education) tasks. ER -